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Business and Economics > Banks and Banking

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Cover FinTech Notes
Private Law Aspects of Token-Based Central Bank Digital Currencies
Marianne Bechara
,
Wouter Bossu
,
Amira Rasekh
,
Chia Yi Tan
, and
Akihiro Yoshinaga
In designing central bank digital currencies (CBDCs), it is imperative that central banks carefully consider its legal foundations. As with any form of money, CBDCs require a solid basis under public and private law to provide it with the necessary legal certainty and political support that will underpin its wide circulation. This Fintech Note examines the private law aspects of token-based CBDC primarily intended for retail use. It follows a previous IMF working paper that examines the legal foundations of CBDC under central bank law and its treatment under monetary law—the main public law aspects of CBDC.
Keywords:
Token-Based CBDC; Private Law; Central Bank Digital Currencies; Legal Framework; Ownership Rights; Transfer Mechanisms; Financial Intermediaries; private law aspect; TokenBased central bank digital currencies; CBDC holder; IMF Library; IMF Fintech Note 2025/003; Currencies; Securities; Commercial banks; Global
Cover Technical Assistance Reports
Colombia: Technical Assistance Report-Foreign Exchange Market Development and Regulatory Framework Review
International Monetary Fund. Monetary and Capital Markets Department
This report provides an overview of the technical assistance provided by the International Monetary Fund (IMF) to the Banco de la República to support the authorities in reviewing the regulatory framework and formulating development strategies for the foreign exchange market.
Keywords:
Currency internationalization; regulatory framework; foreign exchange market development; Colombia.; FX Market development strategy; FX channeling; Banco de la República; IMF's Monetary; Currency markets; Currencies; Exchange rate risk; Exchange rates; Global
Cover IMF Staff Country Reports
Samoa: 2024 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. Asia and Pacific Dept
The Samoan economy has bounced back strongly over the last two years, supported by a recovery in tourism. Fiscal surpluses, in part due to high grant flows, have helped the country emerge from the pandemic with enhanced buffers. At the same time, several longstanding and emerging factors—including lack of economies of scale, climate vulnerabilities, ML/TF concerns, delays in the implementation of public investment due to capacity constraints, and rising outward migration—pose challenges to the economic outlook in the medium term.
Keywords:
APG plenary; basket of currencies; TF risk; follow-up process; burden indicator; inflation risk; help of IMF TA; Anti-money laundering and combating the financing of terrorism (AML/CFT); Credit; Global; Pacific Islands; Australia and New Zealand
Cover IMF Working Papers
TLTRO Spillovers Outside the Euro Area
Carolina Lopez-Quiles
and
Adil Mohommad
We examine spillovers from ECB’s TLTROs on European countries outside the euro area. Using individual banks’ balance sheet data, we find that TLTROs lowered funding and lending rates for foreign-owned subsidiaries, especially in emerging market economies. We also find an increase in profitability among foreign subsidiaries and no effects on solvency risk. The effects are sizable--every €1 billion in exposure to TLTROs via parent banks is associated with 0.2 bps reduction in deposit rates and 0.4 bps reduction in lending rates of foreign subsidiaries. This underscores the need to factor euro area monetary policies into policy settings outside the euro area.
Keywords:
Monetary policy; spillovers; TLTRO; CESEE; TLTRO operation; TLTRO exposure; spillovers from ECB's TLTROs; subsidiaries' share; ECB's Targeted Longer-Term Refinancing Operations; Deposit rates; Bank credit; Foreign banks; Business cycles; Europe
Cover IMF Staff Country Reports
Haiti: Staff-Monitored Program-Press Release and Staff Report
International Monetary Fund. Western Hemisphere Dept.
Recent developments. Haiti is facing exceptionally challenging circumstances. The deteriorating security environment, which reached crisis proportions in the first few months of 2024, has continued to worsen, disrupting supply chains (particularly energy and basic services) and feeding inflationary pressures. In November 2024, Haiti's transitional Presidential Council designated Prime Minister Alix Didier Fils-Aimé to form a new government with a time-bound mandate through next elections. The government has a narrow but important window of opportunity to implement reforms that could help restore the country’s potential over the medium term.
Keywords:
governance Diagnostic Report; SMP lapse; government priority; transparency policy; management of the International Monetary Fund; PROGRAM monitoring; SMP commitment; Credit; International reserves; Global
Cover IMF Staff Country Reports
Suriname: 2024 Article IV Consultation and the Eighth Review Under the Extended Arrangement Under the Extended Fund Facility, Requests for Modification of Performance Criteria, Waivers of Nonobservance of Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Suriname
International Monetary Fund. Western Hemisphere Dept.
The authorities’ commitment to a range of policy reforms continues to strengthen macroeconomic stability. The economy is growing, inflation is receding, donor support is increasing, the public debt is declining, and international bond spreads are at historic lows. The Final Investment Decision (FID) to develop a large offshore oil field was announced on October 1. Moody’s has upgraded Suriname’s sovereign debt rating and changed the outlook to positive.
Keywords:
Surinamese authorities; tax authorities; debt sustainability outlook; recapitalization plan; B. data standard; governance reform agenda; policy priority; management framework; government procurement; Monetary base; International reserves; Exchange rates; Arrears; Caribbean
Cover IMF Working Papers
Portfolio Inertia and Expected Excess Returns in Currency Markets: Evidence from Advanced Economies
Bas B. Bakker
The economic literature has long attributed non-zero expected excess returns in currency markets to time-varying risk premiums demanded by risk-averse investors. This paper, building on Bacchetta and van Wincoop's (2021) portfolio balance framework, shows that such returns can also arise when investors are risk-neutral but face portfolio adjustment costs. Models with adjustment costs but no risk aversion predict a negative correlation between exchange rate levels and expected excess returns, while models with risk aversion but no adjustment costs predict a positive one. Using data from nine inflation targeting economies with floating exchange rates (2000–2024), we find strong empirical support for the adjustment costs framework. The negative correlation persists even during periods of low market stress, further evidence that portfolio adjustment costs, not risk premium shocks, drive the link between exchange rates and excess returns. Our model predicts that one-year expected excess returns should have predictive power for multi-year returns, with longer-term expected returns as increasing multiples of short-term expectations, and the predictive power strengthening with the horizon. We confirm these findings empirically. We also examine scenarios combining risk aversion and adjustment costs, showing that sufficiently high adjustment costs are essential to generate the observed negative relationship.These findings provide a simpler, testable alternative to literature relying on assumptions about unobservable factors like time-varying risk premiums, intermediary constraints, or noise trader activity.
Keywords:
Exchange Rates; Portfolio Balance; Uncovered Interest Parity; Portfolio Adjustment Costs; Risk Premium; Currency Markets; Expected Returns; excess return; portfolio adjustment; adjustment cost; portfolio balance framework; portfolio Inertia; Exchange rate adjustments; Return on investment; Currencies; Interest rate parity; Global
Cover Selected Issues Papers
Financial Buffers in a Euroized Economy: Republic of Kosovo
Javier Kapsoli
and
Ezgi O. Ozturk
This paper analyzes reserve adequacy measurement in Kosovo, where euro serves as the legal tender. The study adapts the IMF's Assessing Reserve Adequacy framework to Kosovo's unique monetary context, focusing on precautionary motives for holding reserves. The analysis reveals limited readily available reserves at the Central Bank of Kosovo and recommends additional government deposits of 1.75-5.75 percent of GDP. Given the significant opportunity costs of maintaining such deposits, the paper suggests alternative solutions, including exploring a private lender of last resort model and maintaining ECB repo lines.
Keywords:
Reserve adequacy; euroization; central bank reserves; liquidity buffers; foreign exchange reserves; bank deposits; monetary policy; Kosovo; Euroized economy; ECB repo line; lender of last resort model; government deposit; Currencies; Lender of last resort; International reserves; Global
Cover Policy Papers
Considerations for the Comprehensive Review of Access Limits
International Monetary Fund. Strategy, Policy, & Review Department
,
International Monetary Fund. Finance Dept.
, and
International Monetary Fund. Legal Dept.
This paper provides background for an informal discussion to engage with Executive Directors, held on November 26, 2024, on the Comprehensive Review of GRA Access Limits. The General Resources Account (GRA) access limits are part of the Fund’s risk management framework. They help maintain a balance between the need to: (i) ensure that members have confidence in the availability of Fund financing; and (ii) preserve liquidity and the revolving nature of the Fund’s resources.
Keywords:
risk management framework; GRA lending commitment; transparency policy; managing transition; enterprise risk consideration; risk tolerance; financing needs; Credit; Liquidity; Credit risk; COVID-19; Global
Cover IMF Staff Country Reports
Costa Rica: Post Financing Assessment-Press Release; and Staff Report
International Monetary Fund. Western Hemisphere Dept.
This paper discusses Costa Rica’s Post Financing Assessment. Growth has exceeded 4 percent so far in 2024 and is expected to moderate to 3 1/2 percent in 2025. Costa Rica successfully completed its Extended Fund Facility and Resilience and Sustainability arrangements in June. Growth remains robust, inflation continues to converge to the central bank’s target from below, and international reserves are ample. Discussions centered on further enhancing economic and climate resilience, capitalizing on Costa Rica’s economic fundamentals and institutions, and sustaining the policy track record that has been demonstrated over the past several years. Fiscal consolidation should be anchored on reducing spending in nonpriority areas and bolstering revenues while allowing for some increase in social spending. The fiscal stance should be centered on adhering to the fiscal rule and medium-term fiscal framework. The recent intervention and resolution of two small, nonbank financial institutions underscores the importance of the authorities’ plans to strengthen the frameworks for bank resolution and deposit insurance. Progress in a range of supply side areas will be important to raise potential growth and mitigate the effects of climate change.
Keywords:
BCCR President Madrigal López; Policy discussion; debt management reform; IMF's transparency policy; financing cost; Credit; International reserves; Global; Central America